Oregon Liquor Control Commission Rob Patridge, Chair, Commission Steven Marks, Executive Director Bill Schuette, Economist Presentation to the House Interim Committee on Revenue November 17, 2015 1
Agency Overview Alcohol Program Oversees the distribution and sale of distilled spirits in the state Centrally purchases, warehouses and distributes distilled spirits to Oregon's independently operated retail liquor locations Licenses and regulates businesses that: Serve alcohol (bars and restaurants) Sell alcohol to go (grocery stores, convenience stores) Manufacture or wholesale alcohol (breweries, wineries, distillers, distributors) Recreational Marijuana Program Responsible for implementation of Measure 91, Recreational Marijuana Licenses and regulates growers, processors, wholesalers, retail, laboratories, research certificates, and marijuana handler permits Tracks the growing, transporting, processing and selling of recreational marijuana products through Cannabis Tracking System (seed to sale system) 2
Alcohol Program What we do License businesses that sell alcohol Issue service permits to trained alcohol servers Manage/distribute distilled spirits Regulate businesses that sell/serve alcohol Public information about responsible use of alcohol Generate revenue for essential services like police, education and health care Administrative hearings unit Regulation of Oregon s Bottle Bill, siting of Redemption Centers Establishing an annual liquor agent training event 3
Legislative Directives for 2015-2017 Increase OLCC Warehouse Shipping Capacity Upgrade equipment - $5 million Repair OLCC Facilities Roof repair - $4.2 million Upgrade Phone System - $110,000 Meet Peace Officer Training Requirements - $290,000 Non-Exclusive Store Differential - $612,000 Application Fee Establishes a non-refundable application fee, not to exceed $150 4
Oregon Retail Liquor Locations 248 retail liquor locations 152 Stand-alone stores 96 Co-located with grocery or general goods Not shown: 87 Distillery retail outlets (sell only their own products) 5
Retail Liquor Expansion Open Recruitment OLCC is recruiting up to 17 new liquor retail locations in the Portland metro area Recruitment period ends January 15, 2016 Area Population* # Stores Population Per Store Washington 560,465 20 28,023 Clackamas 391,562 17 23,033 Multnomah 765,775 31 24,702 Tri-County 1,717,812 68 25,262 Statewide 3,962,710 248 15,979 6
Projected Gross Alcohol Revenue Sources 2015-2017 Biennium $1.2 Billion Total Gross Revenue 7
In 100 Millions $16 $1,600,000,000 $14 $1,400,000,000 $12 $1,200,000,000 $10 $1,000,000,000 Ten-Year Forecast of Gross Liquor Sales By Biennium $1.06 Billion 13-15 Biennium $1.13 Billion GRB 15-17 Forecast $8 $800,000,000 $6 $600,000,000 $4 $400,000,000 5.6% Average Annual Growth over the last 20 years $2 $200,000,000 $- $- Actual Biennium Sales 2015-2017 Biennium Biennium Forecast 8
Distilled Spirits Model Based on Average $16.50 Bottle Price 4% OLCC Operating Expenses Includes Enforcement, Licensing, Administration, Distribution functions 1% 8.93% Bank Card Costs 69% of all purchases made with bank cards Liquor Store Operator Commission Average Liquor Store Operator Compensation 37% Profit for State, Cities and Counties 49% Manufacturer Cost 9
Oregon Distilleries 77 Distilleries in 2015 Includes 87 distillery locations that can sell retail $69 million in Gross Sales in Oregon in 2015 13% of total liquor sales $5.6 million from distillery locations in FY 2015 10
50-cent Surcharge Extension The current 50-cent per bottle surcharge has been extended through June 30, 2017 Expected to generate $33.8 million for the 2015-2017 biennium Distribution of the revenue is determined by the legislature 11
$'S $12,000,000 Beer and Wine Tax Collections $10,000,000 Oregon Beer and Wine Tax Revenue Beer Tax is $0.08 per gallon (1977) Wine Tax is $0.67 per gallon (1977) $8,000,000 $6,000,000 $4,000,000 $36.6 Million Expected in 2015-17 Biennium (2.5% Average Annual Growth over last 20 years) $2,000,000 $- FISCAL YEAR Wine Tax Malt Beverage Tax 12
Oregon Malt Beverage Production From 2013 Tax Filings 43.1 million gallons from Oregon Brewers 15.9 million gallons sold in Oregon About 19% of Oregon beer consumption 27.2 million gallons sold outside of Oregon 13
$8,000,000 $7,000,000 $6,000,000 Annual Liquor License Fee Revenue Off-Premises License Fee: $100 (Grocery and Convenience Stores) 4,600 licenses On-Premise License Fee: $400 (Full-Service Bars & Restaurants) 4,400 licenses $5,000,000 $4,000,000 $3,000,000 $11.7 million in 2015-17 Biennium ( 4.7% Average Annual Growth Over Last 20 Years) $2,000,000 $1,000,000 $- 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 License Fee Revenue Forecast 14
$700,000,000 Biennial Alcohol Revenue Distributions to General Fund, Cities and Counties $600,000,000 $500,000,000 $400,000,000 $436 Million $442 Million 13-15 Biennium Projected distribution For 2013-2015 Biennium $470 Million GRB 15-17 Forecast $300,000,000 $200,000,000 5.5% Annual Growth over the Last 20 Years $100,000,000 $- Biennium Total Distribution From Alcohol 2015-17 Biennium Forecast Distribution Long Term Forecast 15
$54.1 M City Revenue Sharing Alcohol Revenue Distribution 2013-2015 Biennium All Revenue Sources $247.4 M General Fund $77.4 M Incorporated Cities $17.3 M Mental Health, Alcoholism & Drug Services $589 K Oregon Wine Board $38.7 M Counties $435.5 Million Total Distributions 16
Marijuana Tax and Fee Revenue HB 2041 Moved tax collection from OLCC to DOR Moved tax collection point to point of sale 17% tax on value of product at retail 3% optional local tax OLCC to support DOR in tax collection HB 3400 OLCC will license and regulate recreational marijuana Established fee-based regulation program OLCC to set fees (by rule) that cover program costs 17
2015-17 Marijuana Revenue $8.3 million approved for program implementation. Borrowing from the Liquor Fund to finance new positions, information technology systems and other start up costs Startup costs will be covered by license fees and tax revenue during the current biennium Includes repayment of borrowed liquor fund money from Fiscal Year 2015 Marijuana will be completely fee-funded by 2017-19 biennium 18
Setting Marijuana Fees Estimate 2017-19 Budget $7,900,000 (Current Service Level) Estimate Number of Licenses State 2014 Population Grower Licenses Processor, Wholesaler, Testing Lab Licenses Retail Licenses Total Licenses Colorado 5,268,636 465 167 362 994 Washington 6,984,900 548 448 334* (Capped) 1,330 Oregon Estimate 3,933,447 328 188 310 826 19
Marijuana License Fees Adopted by the OLCC October 22, 2015 FEE TYPE AMOUNT Application Fee for Initial License or Certificate $ 250 Annual Marijuana Producers (growers) License Tier I $ 3,750 Annual Marijuana Producers (growers) License Tier 2 $ 5,750 Annual Marijuana Processor License $ 4,750 Annual Marijuana Wholesaler License $ 4,750 Annual Marijuana Retailer License $ 4,750 Annual Marijuana Laboratory License $ 4,750 Research Certificate (three year term) $ 4,750 Marijuana Handler Permit (five year term) $ 100 Additional Criminal Background Check $ 50 Change of Ownership Review $ 1,000 Change of Business Structure Review $ 1,000 Transfer of Location of Premises Review $ 1,000 Packaging Preapproval fee $ 100 Labeling Preapproval Fee $ 100 Late Renewal Fee for license if received less than 20 days before expiration date $ 150 Late Renewal Fee for license if received after expiration date $ 300 Late Renewal Fee for handler permit if received less than 20 days before expiration $ 50 Late Renewal Fee for handler permit received after expiration date $ 100 20
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